SECRET
5. A broad functional breakdown of the Army cost estimates is being prepared which would, I think, be of interest to the Governor and I hope to let you have this within a few days. Similarly the Governor may wish to know that during the recent visit of Stretton and others to Hong Kong it was concluded that in so far as the PWD might not have the design capacity to cope with the whole of the expanded programme, MPBW would be able to take on the balance.
6.
The foregoing relates to information for transmission to the Governor but in view of the extent of the increases in the works programme we now foresee I should perhaps say, particularly for the information of Nicholls and yourself, that the revised proposals have been carefully and closely considered by MPBW and MOD. We appreciate that the Treasury will probably wish to examine the programme underlying these figures with some care, and we hope that But if we are this can be done according to normal LTC time-table. to conclude negotiations for a new agreement on the defence contribution before Sir David Trench leaves Hong Kong the time-table
We leading up to these negotiations is a good deal more exacting. therefore hope that Nicholls will agree that the figures can be transmitted to the Governor as they stand. After all - and here I revert to a point you may wish to make to the Governor - we are still at a very preliminary stage: all we require now is the Governor's initial reactions to enable us to obtain ministerial instructions on our own guide-lines for the negotiations proper.
7. I am sending copies of this letter to Nicholls and (together with a copy of yours of 18 February) to Stretton.
Jum
sincerely keln Dais
SECRET
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